Marking as Merged means that the local version of the file contains the content you need after comparing the files and solving the problems manually. Subclipse still needs to update the local file so that the SVN metadata is happy, so it saves the current contents of the file, starts the svn update, and then replaces the file.
So, now you can run Team> Revert if you want the file to match what was in the repository, or Compare with> Base Revision if you just want to explore the differences again and possibly make additional changes.
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